BOONE — Watauga County was issued an unmodified opinion for its fiscal year 2018-19 audit of financial statements, but had two findings in an internal control review compliance audit.
Travis Keever, with the Gould Killiam CPA Group, presented the audit findings to the commissioners on Dec. 17. Keever said the firm issued a clean opinion on the 2018-19 financial statements; the report was released Dec. 13. He said the firm believed the financial statements were materially correct.
Keever said the firm tested two major programs for federal single audit: Medicaid and foster care.
“The weaknesses in internal control in the two federal programs were related to a lack of evidence of supervisor review on a number of Medicaid and foster care cases,” Keever said. “This is also considered material non-compliance for the Medicaid program as these reviews are required by the state. Supervisory reviews over the eligibility determinations of primary control is in place to make sure those determinations have been made properly.”
Keever added that the firm suspects that these two areas are referring properly, but there wasn’t documentation to show it. The firm had analyzed 90 cases, and a “handful” of the supervisor reviews were unable to be provided, Keever said.
“It doesn’t mean they weren’t done,” Keever said. “Eligibility determinations were made correctly.”
According to Keever, Watauga’s Department of Social Services had created a corrective action plan.
According to the audit report, the county has governmental funds, a general fund and proprietary funds (used to provide information on the solid waste enterprise). The county’s assets ($219,491,752 with $4,532,376 in deferred outflow of resources) exceeded its liabilities ($67,707,781 with $1,055,051 in deferred inflow of resources) at the close of the fiscal year — leaving it with a net position of $155,261,296. The report also stated that the county’s total net position increased by $10,495,380 primarily due to an increase in cash assets from revenues exceeding budget alone with operating expenditures below the expected levels.
The report states that governmental activities accounted for 96.6 percent of the total growth in the county’s net position. These activities included an increase in sales tax, continued high property tax collections at a rate of 99.01 percent and close monitoring of expenditures throughout the year.
The county’s expenditures were “pretty much right in line with other counties” as education and public safety were its two biggest functional expenses — roughly 30 percent of the county’s budget is spent on education and about 20 percent on public safety, Keever said.
Keever said Watauga County was in better shape than others when it comes to its liabilities regarding other post employee benefits. According to Keever, Watauga sets aside funding for this expense.
“I would commend you for that,” Keever said. “It’s unusual, especially for a county this size.”
Keever added that 24 retirees currently receive county benefits, and the county has 249 active employees who are eligible for benefits. During the meeting, Geouque addressed the commissioners with a county staff request to move $400,000 from available fund balance and allocate it to health insurance savings — which was approved by the board. Geouque explained that the county is working toward self-funding its employees’ health benefits.
The county’s total debt increased by $14,607,639 in outstanding principal as a result of financing for the community recreation center. The total outstanding debt principal is $49,604,027; the county has a debt limit of $688,841,459, according to Geouque.
The county’s unassigned fund balance for the general fund totaled $20,786,602, representing 40.1 percent of total general fund expenditures, according to the audit. This amount is an increase of $649,173 in the unassigned fund balance from the previous fiscal year. Keever reminded the commissioners that the state requires counties to keep 8 percent of general fund money on hand — which is about one month of expenses.
Keever said he’s also suggesting to all governing boards he addresses to enhance their cybersecurity measures as local governments have become a target for phishing scams. He urged the county to have a plan in place, conduct a risk assessment and review what cyber insurance coverage it has.
The commissioners will not be meeting for their Jan. 7 meeting. Their next regularly scheduled meeting is Jan. 21.